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Hi, I am Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. I focus on early stage investments and want to share my thoughts and what’s going on in the industry in this weekly newsletter.

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Editorials

Last week, I received a few similar questions around how deal flow comes into Pantera. Every investment firm has their own thoughts/strategies on this topic but the overwhelming overlap across all firms is their network. I wanted to shed some light on how I think about deal flow for Pantera and there are three main ways on how deals come in:

Pantera has co-invested with other angel investors and venture capital firms throughout the last 6 years. We rarely take the entire round, syndicating mostly during our second fund deployment and leading mostly during the current third fund deployment.

Pantera has invested into 94 companies across both the ICO and venture strategy. We try to provide general and strategic value to our companies and have gotten good referrals from our portfolio. Good entrepreneurs learn from other good entrepreneurs, and we look to fund the best entrepreneurs.

Pantera is one of the earliest investment funds focused on blockchain/crypto so we taken the opportunity to build relationships with corporations, banks, law firms, and other entrepreneurs.

2. Research - using our theses to actively look for companies that are a fit.

Local on-ramps - Pantera has had a thesis around investing into on-ramps in different geographies. We prioritized certain geographies due to factors like capital controls, inflation, wealth, and mobile penetration.

Developer infrastructure - Pantera has recently invested into infrastructure that fit certain sought-after use-cases like fiat-crypto on-ramp, node/tools as a service, and staking as a service.

Community - Pantera and its employees being active on social media and across communities within universities, surrounding regulations, and inclusive of media.

Below is an estimated snapshot of how the above categories break down:

Pantera Deal Source Breakdown

A large majority of our deals are coming through our network while research is second. While we have some that come through cold emails, it is much more rare. We look at every inbound email, but I suggest going through someone in our network to get in touch with us. As an investor, you look for reasons to not invest and getting in touch through someone you don’t know shows hustle and helps de-risk the team factor. The ideal situation is to get on an investor’s radar and build up the relationship and credibility over time before fundraising. Even if you don’t have a conversation, introducing yourself and providing updates/progress go a long way. Strong referrals from other investors and entrepreneurs that we trust along help.

The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury, has imposed its first-ever penalty on a peer-to-peer crypto exchange for violating AML regulations, among other violations.